I was able to find some partial answers:
This question asked about the same thing. A comment from @Hans Passant referenced This Document which indicates there is a relaxation of the scoping rule for lambdas.
This can explain why /langversion:latest and /langversion:7.3 behave differently
For a .net 4.6.1 project though, I would assume /langversion:latest should result in at most C# 7.3. But apparently it is not the case or maybe there is something else going on here. Hope somebody can shed more light on this.
